Atlantic Crude Freight: Compare Like Quantity Bases

Overview

A low number per unit can be misleading when the units differ or when one offer includes a fixed commitment that does not fall with the parcel size.

Key takeaways

• Keep the original price expression beside the converted result.
• Use an appropriate authorised conversion basis for the actual crude.
• Compare identical quantity and service scenarios before ranking offers.
• Show fixed, variable and minimum components separately.
• Treat a converted internal figure as analysis, not amended contract wording.

Preserve the offer before normalising it

Capture the stated price, unit, quantity range and material conditions exactly enough that another reviewer can understand the original proposition. Do not retain only a converted cost per barrel or total amount. The original expression explains how the payment may respond when the shipment changes.

Identify the service scope associated with the price. A loading range, additional destination option or different delivery proposition can affect the amount independently of units. If the offers describe different movements, request a common base case or present separate scenarios.

The comparison should also show the status of the offer. An indicative price requiring further acceptance is not equivalent to a usable firm proposition merely because both can be converted into the same currency and unit. Conditions remain part of the economic comparison.

Where a quotation uses a reference-based expression, obtain the applicable reference and interpretation from the appropriate source. Do not insert an unrelated current index or a remembered nominal figure to fill the calculation. An unresolved basis should remain a visible limitation.

Use a cargo-specific conversion basis

A conversion between mass and commercial volume requires an appropriate basis for the actual cargo and purpose. Obtain that basis from the authorised information rather than applying a universal factor to every crude grade. Preserve the source and any conditions attached to it.

The commercial worksheet should state whether the conversion is being used to estimate a total, compare unit costs or support another internal decision. Its purpose matters because the applicable payment basis may remain the original contractual unit.

Avoid treating small differences in converted figures as decisive when the underlying quantity is provisional. Show the uncertainty that can change the result. A precisely displayed number does not become reliable simply because a spreadsheet calculates many decimal places.

For an actual transaction, the responsible parties should confirm any technical measurement or conversion question. The commercial desk can show the arithmetic and identify missing inputs without prescribing measurement procedures.

Work through a common-unit comparison

The following example assumes a conversion factor solely to demonstrate arithmetic. The factor is fictional and must not be used for an actual crude parcel.

ILLUSTRATIVE: Assume a fictional comparison quantity of 500,000 commercial barrels and an expressly assumed conversion of 7.5 barrels per tonne. The resulting comparison mass is approximately 66,666.67 tonnes.

Offer A is $1,000,000 for the defined movement. Offer B is $14.40 per tonne on the assumed mass basis. B therefore totals $960,000, equivalent to $1.92 per assumed commercial barrel. A is equivalent to $2.00 per barrel, so B is $40,000 lower before any scope differences.

Now assume B excludes an additional service costing $60,000 that A includes. The comparable B total becomes $1,020,000, or $2.04 per barrel. On that adjusted scope, A is $20,000 lower. The unit conversion was necessary, but the service adjustment changed the ranking.

The example deliberately separates arithmetic from commercial comparability. A desk that stops after conversion selects B. A desk that checks the excluded service reaches the opposite conclusion under the stated assumptions.

The adjustment must be supported in an actual comparison. Do not invent a service allowance simply to force a preferred ranking. If the excluded amount remains unknown, show the known price difference and the threshold at which it would change the decision.

Test quantity changes under the original expression

Once the base comparison is complete, examine the actual quantity range. A lump sum remains fixed only to the extent supported by its terms. A variable expression changes with its applicable quantity, while minimum or option provisions may alter that relationship.

Do not assume that the internal equivalent per barrel is the rate that will be invoiced. It is a result for the selected scenario. If the parcel becomes smaller, the same fixed amount produces a higher unit cost even though the original offer has not changed.

A useful worksheet therefore retains two layers: the original calculation mechanism and the selected common-unit output. When quantity changes, rerun the original mechanism first, then convert the resulting amount. Multiplying an old internal equivalent by the new quantity can incorrectly make a fixed commitment appear variable.

Where the quantity basis itself is revised, identify whether the change affects purchase, sale and freight calculations equally. The same corrected cargo figure may not control every commercial amount. Review the applicable bases rather than replacing numbers indiscriminately.

A quote comparison checklist

Complete the checks in that order where practical. There is little value in refining decimal precision while the original price scope is still unknown.

Keep the recommendation understandable

Present the original offer and the comparable total, then explain the material adjustment that drives the ranking. Management should be able to see whether the difference arises from price, quantity, an excluded service or a condition affecting usability.

Where an adjustment is uncertain, state the crossover amount rather than pretending the estimate is firm. For example, the recommendation may depend on whether an excluded service costs more or less than the known headline advantage. Obtain the relevant quotation before commitment where that uncertainty is material.

Keep contractual interpretation separate from the analytical conversion. Check the current text before asserting that a party must invoice on the worksheet's common basis. The purpose of the comparison is to inform selection, not to rewrite the offer unilaterally.

Fictional case: the old unit equivalent reused

A fictional trader selects a fixed freight offer after comparing it with a variable alternative. The cargo quantity subsequently decreases. An analyst updates the budget by multiplying the earlier internal per-unit equivalent by the smaller quantity.

That method reduces the forecast transport amount even though the fixed commitment remains unchanged under the stated commercial terms. The corrected worksheet first retains the fixed total, then recalculates the unit cost for the smaller parcel.

The desk can now assess the real effect on delivered contribution and discuss any available commercial adjustment. The correction prevents an internal comparison number from being mistaken for the original payment mechanism.

Common mistakes

Using a universal crude conversion factor can undermine the entire comparison. Converting units without aligning service scope produces another false ranking. A third mistake is treating an internal unit equivalent as the contractual rate after quantity changes. Finally, avoid reporting more precision than the underlying inputs support or using an invented allowance to remove an inconvenient quotation difference.

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